Marketer kämpfen darum, den Marketing-ROI nachzuweisen und zu messen

by Bistriti Poddar |

Marketer kämpfen darum, den Marketing-ROI nachzuweisen und zu messen


While return on investment is a powerful metric, only few marketers are able to measure it well. ROI is the most important metric that decides a marketer’s performance. According to a survey, only 39% of businesses are able to measure it the right way. Another survey found out that almost 71% of marketing campaigns fail … Weiterlesen

Optimizing Customer Loyalty Solutions for Digital Markets

Optimizing Customer Loyalty Solutions

“Going digital” in 2020 is not just an exercise to be discussed later, but a mandatory requirement if businesses want to survive and thrive in a competitive environment. Especially in a pandemic-hit world, traditional brick-and-mortar businesses realized how important it is to be digitally established. In fact, many companies have thrived by putting all their … Weiterlesen

Use Aspirational Loyalty to Accelerate Customer Revenue

aspirational loyalty

Customers today are spoilt for choice. Whatever you offer your customers, your competitor can offer a bigger bait to lure them. The threat to lose your most loyal customers is always on the horizon. You can create loyalty programs that are created to retain your best customers. But you’re your competition can design an equally … Weiterlesen

Hotel Loyalty Program Is Proven to Grow Your Hotel Business by 50%

Hotel loyalty program

When American Airlines launched its rewards program (AAdvantage) in the early 1980s, it gave rise to rampant loyalty programs in the hospitality industry, including the hotel industry. Since then, the hotel loyalty program has seen a meteoric rise because of its mammoth returns. But fast forward 2020, and the world saw lockdowns on an unprecedented … Weiterlesen

Referrals vs. Discounting: The Long-Term Value of Word of Mouth

referrals vs. discounting

While certain marketing tactics will give you quick wins, they fail to give your business long-term value and growth. Extreme discounting often falls into this category, and it’s become a pervasive trend. One way to incentivize shoppers to spend–as well as share your business with friends–is through a referral program. Let’s take a look at referrals vs. discounting, and how to optimize your referrals ROI.
The ideological difference between referrals vs. discounting is all about value. If we look from the top level, it may appear that discounts bring a sudden spike in sales and it pulls lots of customers. The inner look will reveal that even though that’s true, it’s a swell. Apart from cheapening the brand value and brand status, extreme discounts carry with them a slew of factors that may prove detrimental for the brands in the long term.

Referrals vs. Discounting: Bad Economics

In an era where profit margins, at large, are rapidly shrinking due to intense competition, discounting can be a dangerous game. Think in numbers now. When you give 50% discount, what does that do to your sales It directly means that to fulfill your revenue goals, you will have to sell twice as much. The question then begins to squirm is this: Do you have the time or the manpower to do that?
If a product has a profit margin of 30% and you are giving a 10% discount to make the sale, you lose a massive one-third (33.33%) of the available profit. If we go on dismantling it, it also means that your company has to work 33.33% harder to earn the company the same amount of money, which can be highly demotivating for staff members. By not giving discounts, in essence, the company can work 33.33% less and earn the same income.

In contrast to discounts, the economics of referrals are much more logical and gives a breathing space to your sales funnel. Instead of broad price cuts that can create chaotic demand, referrals only reward new customers or those or brought a new customer in. It’s an even pace of incentives, only discounting purchases when your business grows.

Basically, there are two main ways through which the entire referral process can be rationally incentivized. First is the optimal payment mode, a.k.a. the linear mode, where the customer gets rewarded for each number of successful referrals that he makes. In other words, if you refer one friend, you get $10 off. If you refer two, you get $20 off, and so on.

Known as the threshold mode, the second way is to reward a customer if he makes a specific number of referrals. In either case, the rewards are given for an act which will create a possibility of more purchases. In fact, threshold mode has been proved as a revenue booster.

Living Social, a daily deal website, is a living example of the success of the threshold mose. Whenever someone buys a deal from them, Living Social encourages the customer to send a referral to their friends. If at least three friends subsequently purchase based on this post, Living Social provides the customer with a full refund of the purchase price. It has been done by keeping in mind that two referrals may not bring a profit, but three referrals push Living Social to a tangible profit.

Meanwhile, a Annex Cloud client in the fashion industry is using the linear mode of referrals, and is offering the referral incentive in terms of points in their loyalty program. On average, they are awarding customers with $25 worth of loyalty points a week for their friend referrals. However, those friend referrals are averaging $5500+ in revenue a week, which creates a referral ROI of 219:1 for incentives and purchases.

Referrals vs. Discounting: The Risks of a Price War

Bruce Kasanoff, co-author of Smart Customers, Stupid Companies, is right when he says that when you sell products based on price, you are always at the mercy of your dumbest competitor.

If competitors lower prices, it forces price-slashing companies to do the same. Obviously, there is a point below which you cannot offer discounts. Suddenly such companies find themselves caught off guard, as apart from price, they have nothing substantial that might give them a competitive edge. As such companies have been relying heavily on price sensitive customers, they fail to retain them. As soon as their customers see a better deal from the competitor’s side, they switch without even a second thought. Due to this price game, they aren’t missing just the repeat purchases, but also the entire spectrum of benefits that customer retention process brings.

Of course, it will be foolish to believe that there is no competition in the referral segment, as so many businesses capitalize on referral marketing. But its intensity is much lower when it comes to pure price war.

As per the University of Chicago, non-cash incentives are 24% more effective at boosting performance than cash incentives. A referral program is perfectly placed in exploiting this insight in order to be more profitable. Cash rewards can be easily replaced with experiential rewards like giving an early/exclusive access to your products or service, or making things simpler for them at the front of customer service. There are innumerable ways to offer the absolute best Kundenerlebnis for your most powerful advocates.

What’s best is, these experiential rewards can be altered according to the theme and need of your business. If you are in a hotel industry, you can offer a deluxe room as a reward. Even compared to your competitors’ offers, it can be a unique experience. If you are in a home decor industry, you can reward your top referrers by giving them free consultations. As you can see, it is taking the price factor completely out of the equation. Consequentially, businesses can be free from the rat race of cutting down the prices.

Referrals vs. Discounting: Virality

When comparing referrals vs. discounting, it seems like the latter have a disorganized nature. The reason for this is that discounts are a one-to-many type of communication.

A store will have a placard announcing the discounted prices. The online store will do the same by putting discounted prices on its website. Those who get to see it will think about these prices. Those who remain out of the store’s sphere will not even get to know that such discounts exist. Even when the company’s team uses ads, social posts, marketing emails, and so on to circulate the news, these will still be one-to-many communications. As the buyer is getting a discount after every purchase, he has no motivation to spread it to others, except out of an altruistic attempt to let a friend know about a good deal. In short, advocacy is not the area of concern for core discount givers. 

Referrals, on the other hand, are by nature social. A referral program is not there to reward only a purchase behavior. It is there to reward sharing, and emphasizes advocacy. Many types of referrals are one-to-one and come with a personal appeal that regular promotions just can’t achieve.

Sharing and referring often happens on social media which comes with an enormous potential of “sharability.” When a buyer shares his purchase or a referral link on social media, the entire sphere of his social media networks gets exposed to his shares. When referral programs pick up steam like this, they reach mass audiences but still operate on a personal level.

Referrals vs. Discounting: Making It Work

You can only achieve the cost-effective growth that a referral program brings if you implement it properly. We have many resources about referral best practices, including a white paper, tips on A/B testing for referrals, referral marketing FAQs, refer a friend 2017 best practices, and much more.

That said, here’s a summary of some necessities for your program:

  • Test and customize your referral discounts.
  • Ensure that your referral offer is one of the most enticing incentives your business has. For example, if you offer 15% off to shoppers who sign up for your email list, but only 10% off for referring a friend, they won’t be motivated to share your brand. Read more about the frustration that this causes here.
  • Promote your program! Make it noticeable on your site, and mention it in your email, social media, and advertising campaigns.

In looking at referrals vs. discounting, the former offer reach, trackability, and unbridled possibilities of conversions. In its opposition, discounting appears as a temporary means to get into the market. But the strain that such discounts put on the economic backbone of the company can paralyze it in the long run. 

See Now Buy Now Trend: The Good & The Bad

See Now Buy Now Trend

When asked about the rampant See Now Buy Now trend, which is revamping the old connotations of the fashion industry, Alber Elbaz, a Moroccan-Israeli fashion designer, calmly said “When there is a wind of change, we can build a wall to protect ourselves from the storm or we can build a windmill to let the wind blow faster, so we can benefit from the wind and be part of the change.” Of course, he was right not just in a philosophical sense, but also in terms of business. And as the wind of that change becomes a year old experiment–pioneered by giants like Burberry and Tomy Hillfiger–much of the dust has settled down, painting an unbiased picture of the efficacy of this trend. The problem is that medicine always comes with a possibility of side effects. And business trends, in concept, are no different than medicine. They can help but they invariably come with negative side-effects. And having an acute understanding of this simple truth is what matters the most while dissecting this trend with the scissors of rationale.

The Positive Side Of The See Now Buy Now Trend:

A) Seizing The Moment:

For at least half a century, the mainstream fashion industry has been nourished and nurtured by the two-season model designed around “autumn/winter” and “spring/summer”. The repercussion of this model was that fashion giants used catwalk models to showcase those clothes that people would only get the chance to buy after six months or so. But in the current ecosystem of digital media, which comprises of social media and other chat applications, buyers are just a click away from countless beautiful clothes and apparels. Naturally, the impact of fashion shows’ clothes, which was lingering once, gets withered away in the current span of 6 months. The desire that used to steadily grow and result in a purchase decision, no longer exists. In the fury of instant satisfaction, it’s now or never, and fashion is now special case.

The moment where people are dazzled by the art, craft and beauty of a fabric for example, is the right moment to seize. Because that’s where they are likely to make an impulsive decision. Zach Duane, CEO of Victoria Beckham, has put it in a clear way: “If you are spending millions, promoting a collection, why on earth would you be doing that six months before it hits store, when you could drive desire at the moment it goes on sale?” Besides, getting the clothes straight off the runway has the “I was there” badge and social currency aura attached to it. This all plays on the psyche of customers, supporting the reports showing high sales as the result of See Now, Buy Now trend.

B) Broadening The Vision:

As I have mentioned, the fashion industry has followed the two-season calendar ritually for many years. But the Formula One like speed with which globalization is sweeping everything and transforming the world into a global village, has made the idea of seasonal trends antiquated. The season barrier is blurred by the plenitude of air conditioning, of mass-market long-haul travel, and of a global economy. Amidst such dynamic environment, it would be a silly mistake to design clothes only for people who live in one climate, one culture, or one way of thinking. If your brand lover is somewhere in a different hemisphere, whose season doesn’t match with yours why would you focus on a specific season? Digitalization, which has made the See Now Buy Now trend a practicality, is helping the fashion industry to move away from the twice-yearly trend roundup. Instead, it has made the industry much better in catering to the world.

C) Counter Attacking The Counterfeits:

The parade of clothes that happens during the catwalk is no longer restricted to the catwalk itself. The wine sippers, who sit in the front row of the show, make it public by sharing them on Instagram or Facebook. This early glimpse of high-end designers work, simply opens doors to imitators. A six month period is more than enough for them to copy these designs by making negligible alterations and presenting those designs as their own. But this problem can be crushed by making the collection available for shoppers as soon as it first display hits the public domain.

Many people may fail to gauge the importance of this benefit. But the point is, creating an authentic and well designed piece of clothing is an art, and art loses half of its sense when the original idea is lost. Big brands have maintained their supremacy due to the high artistic quotient that drives the imagination of new designs, fabrics and patterns. Their ability to come up with authentic pieces that others can’t even think of is the biggest differentiator for them. If that differentiator melts, which is quite a possibility if others crate the cheap copy of their classic idea, they may have to struggle for identity!

The Negative Side Of The See Now Buy Now Trend:

A) Inventory Woes:

To implement the See Now, Buy Now trend, designers need to have stocks at their disposal. Otherwise, they can’t make the clothes available immediately. That has some financial and stock dangers, but those dangers can be handled efficiently by well-capitalized brands with their own stores and the ability to coordinate runway looks with in-store merchandising. It’s certainly not a young fashion brand’s cup of tea.

Besides, if designers don’t have a strong market research efforts, it becomes extremely difficult to predict demand for a new collection, as volumes are ordered from suppliers before there is any real life reactions to base decisions on. Due to this inaccuracy in the prediction, they may overstock or under-stock. In the former case, they run the risk of creating a surplus of stock which then must be disposed of at a discount, diminishing margins. In the latter case, they may miss some huge business opportunities. The only way to tackle this unfortunate situation is to ensure that your suppliers are agile enough to facilitate the reordering of the most popular lines.

B) Stultification Of Creativity:

From thinking about the feel and texture of a garment to the finalization of the design, creating a fashion apparel is an amalgamation of many creative processes. But making the clothes instantly shoppable during the fashion shows freezes the development of collections for several months, in order to put them into production in time to stock stores before staging the show. Even though Christopher Bailey, Burberry’s chief creative officer and CEO, says that see-now-buy-now policy doesn’t mean that you lose any creativity or any of the artisanal skills, this is in gross contradiction with the designer’s psychology and his working principles.

The second, and perhaps the most worrying point is that this consumer-driven buy now gives the consumer tremendous control. Any work of art, like creating beautiful clothes, can’t be done by catering to customers’ aspirations all the time. Otherwise, customers end up being the co-creators of the products. And in the field of fashion, which is all about creation and innovation, listening too much to the customers can be detrimental. The reason behind this is designers, and not customers, are in a better position to think what magic a fabric can weave. This was well explained by Henry Ford, founder of the Ford Motor Company, when he said, “If I had asked people what they wanted, they would have said faster horses” People very often don’t know what they want or need. Especially for the products that fall into the creative or innovative segment. They realize its worth after the product has come into existence. Apple products, created by Steve Jobs, can be seen in the same light. It took a while before people learned to understand his disruptive product innovation. Maybe, that’s why Diego Della Valle,  president and CEO of Tod’s, was a bit dismissive about this instant gratification method when he said, “It’s true that we need to be quicker, but we are not talking about a piece of soap. We need to [build the] desire for the products and make the storytelling [perfect].”
After looking at both the good and the bad sides of the See Now, Buy Now Trend, the most certain thing is the fact that this trend is going to stay. And the reason for this is we live in the empire of immediacy, fanned by things like one-day-delivery.

Note: Go through this blog where we have explained  Burberry’s motives behind implementing See Now, Buy Now trend.  

Effective Use of Social Media for eCommerce: Facebook Edition


By now it’s pretty obvious Social Media is a vital component of any retailer’s or brand’s marketing efforts and with Social Media management tools like Hootsuite, executing across multiple networks has become easier than ever. However, it’s easy to fall into a trap of treating all platforms the same, positing similar if not duplicate content … Weiterlesen

Annex Cloud introduces ROI Driven Visual Commerce suite

Visual Commerce Suite

The Role of Visual Commerce in Marketing With the popularity of social media such as Instagram and Snapchat, the shift towards visual representation has risen tremendously. Everywhere you see on the social networking sites are beautiful pictures that tell a story of their own. And why not? The right hemisphere of the brain understands through … Weiterlesen

Measuring Social ROI with Engagement, Data and Revenue

Social ROI

Social media has proven itself as a valuable tool for eCommerce to increase acquisitions, conversions and retention. Return from Social can come in three forms: engagement ROI, data ROI and revenue ROI. Last month a specialty brand went live on Annex Cloud’s social commerce platform, driving over 20,000 contest entries in less than 30 days. … Weiterlesen

Drive ROI with Social Media [Infographic]

drive roi

Did you know that 90% of all purchases are subject to social influence? According to research, consumers are more socially invested than ever before. Social media marketing is not only driving ROI, but recent studies confirm that consumers spend 22% of time online on social channels like Facebook, Twitter, and Pinterest. Building brand advocates through social engagement is essential to … Weiterlesen

How E-Commerce Marketers Can Improve Social Engagement [Infographic]

The world of e-commerce becomes increasingly competitive every day, and there is more pressure than ever to disrupt, stand apart from the crowd, and stay at consumer top of mind.  As retail giants Amazon and Alibaba scale up and dominate on price points, shipping costs, and product availability, retaining core customers becomes even more essential. … Weiterlesen

[White Paper]
[White Paper]